CFA Society Singapore
SINGAPORE (Jan 23): Delong Holdings, the Singapore-traded steelmaker with assets in China, jumped 26 cents to $3.76 with 182,000 shares traded.
The stock has risen 44% since Evraz Plc, a Russia steelmaker that owns a 15% stake in Delong, said in a Dec 2017 interview with Bloomberg that the company was undervalued because large investors have long ignored the stock.
Fair value could be US$4 billion to US$5 billion, compared with its current market value of about $200 million, said Aleksey Eberents, director for corporate strategy for Evraz in an emailed interview.
Delong’s enterprise value to EBITDA was less than 1, compared with a typical ratio in China of 10 to 12. Ebitda would be US$390 million in 2017, highest in seven years, he added.
Delong has US$620 million in cash and planning new projects, which could increase its value.
If the value of Evraz’s stake in Delong increased, then the company may sell it to fund other projects or pay higher dividends, Oleg Petropavlovskiy, analyst at BCS Global Markets, was quoted by Bloomberg as saying.